In this week’s housing round up we look at a surprise rise in housing prices, despite a fall in mortgage approvals and sales in October. Finally, the UK’s estate agents finally report some positive news.

Surprise rise in house prices

The monthly house price survey by the Nationwide Building Society showed a surprise rise in house prices in September.

According to the UK’s largest building society house prices rose by 0.4% in October and by 0.8% year on year.

The Nationwide’s chief economist, Robert Gardener said: “Given the challenging economic backdrop October’s data is encouraging, but it doesn’t fundamentally change the picture of a housing market that is treading water. Property transaction levels remain subdued, and prices essentially flat compared to last year.”

He continued “The outlook remains uncertain, but with the UK economic recovery expected to remain sluggish house price growth is likely to remain soft in the period ahead with prices moving sideways or drifting modestly lower over the next 12 months.”

As usual the headline masked regional differences, with sales increasing in wealthier areas of the country but falling away in poorer parts.

The news was not greeted by universal joy, for example Tracy Kellett, managing director of UK buying agent BDI Home Finders, said: “Prices are up, but then with so few transactions there will always be volatility and price exaggeration. One lender in a one-month period does not a market make. Treading water is a better reflection of where the market is at, albeit with a pocket full of stones.”

Looking forward to next year she continued: “Buyers will be even more cautious in 2012 than 2011, while vendors will not sell unless they really have to. The lack of recreational home-moving means 2012 will almost certainly be another year of stagnation.”

Mortgage approvals & completed sales fall

The number of new mortgages approved by lenders fell in September.

The figures released by the Bank of England showed that 50,967 mortgages were approved in September, down by 3% on August and the first time a fall has been seen for five months.

The number of completed sales also fell, for the second month in a row. HMRC figures showed that there were 72,000 completed sales in September, down by 11,000 from the peak of 83,000 in July.

Some experts believe that the figures mark an end to the brief rally in sales, with the fall in mortgage approvals likely to affect mortgage dependent sales in months to come.

Reacting to the figures Howard Archer, of IHS Global Insight, said: “September’s retreat in mortgage approvals reinforces belief that there is little evidence of any significant step up in housing market activity.”

He continued: “Prices are likely to trend down over the coming months in the face of very low consumer confidence amid persistently weak economic activity, markedly rising unemployment and muted earnings growth.”

House hunters increase

Despite the fall in mortgage approvals it seems that the number of people interest in moving house is on the up.

Figures from the National Association of Estate Agents (NAEA) has shown that the number of enquiries made last month rose to levels not seen since before the credit crunch and the recession.

The NAEA revealed that each estate agent now receives an average of 308 enquiries per month from would be house hunters and the average number of houses on the books of estate agents has risen to 72 from 65 the month before.

The percentage of homes sold to first time buyers has also risen, up 2% from last month, this will be seen by some property experts as an encouraging sign as first time buyers are vital to a thriving housing market.

Reacting to the figures Wendy Evans-Scott, president of the NAEA said: “The number of first time buyers on the market has increased slightly over the course of the month, however our agents are reporting widespread regional variation. Lending still remains a real barrier to home ownership for this part of the market.”

Investment Sense Ltd is registered in England & Wales no. 07050481. Investment Sense Ltd is an Appointed Representative of the Sense Network FCA No. 465124, which is authorised and regulated by the Financial Conduct Authority. The guidance and/or advice contained in this website is subject to UK regulatory regime and is therefore restricted to consumers based in the UK.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service please visit www.financialombudsman.org.uk.